Frank Abagnale spoke at this year’s EBT Next Generation Conference about Identity theft, and had two sound pieces of advice for everyone. The first is to follow the money. The second is to think outside the box.
Who is Frank Abagnale and why should we listen to him?
Frank Abagnale was the subject of the movie Catch Me If You Can, and famously scammed the banks with check cashing schemes while also impersonating an airline pilot, a doctor, and a lawyer. He has since become an authority on identity theft working for the FBI for 40 years, and writing several books on identity theft, including Stealing Your Life in 2007.
While fraud was a hot topic this year at the conference as it has been in past years, there was a very mixed set of messages throughout the EBT Next Gen 2015 Conference on the nature of the threat and the best way to combat it. Heeding Frank’s advice, here are a few important perspectives.
Follow the Money
There were some conflicting statistics on the extent of fraud in SNAP programs for examples, with numbers being cited ranging from 1% to 4% at various times in EBT history.
We have seen the 1% fraud rate applied to trafficking (www.snaptohealth.org), a very large problem with fraudulent use of nearly $1 Billion of taxpayer funds.
The EBT fraud dilemma parallels the larger problem facing the United States, where Frank identified $994 Billion fraud losses in 2013, nearly a trillion USD!
Based on our analysis of EBT programs using our multi-layered, automated fraud detection capabilities within our IVR, we can detect more than $100 million in annual fraud with a significant portion related to trafficking. Our conservative estimates of fraud losses that can be avoided by identifying fraudulent behavior and shutting it down before losses are incurred are a savings of $3M to $12M that can be achieved for medium and large programs respectively on an annual basis.
Much of the discussion at the conference was about trafficking by individuals, with tactics including anything from posting EBT cards on Craig’s List or Facebook, selling EBT cards on street corners, or unscrupulous merchants who will buy cards at 50 cents on the dollar and turn around and launder these cards through their retail stores, often buying goods they can mark up and sell to pocket the profits.
With visibility into IVR data, Contact Solutions can narrow down the source of those career criminals or small-time shysters who are trafficking cards in volume as a day-to-day business, and we have validated the activity in multiple State programs.
We see ongoing attacks as well as new attacks and tactics every month. Our recent Adaptive Fraud Prevention press release highlights some of these findings.
In order to combat this fraud, States need the resources and the right technology. Continuing with the follow the money theme, the USDA has recently awarded a series of grants to select states for deployment of additional technology in their fight against trafficking fraud. Agriculture Under Secretary Kevin Concannon announced earlier in October 2015 that more than $9 Million in grants have been awarded to Alaska, Maine, Mississippi, Nevada, and New Jersey to combat fraud.
Think Outside the Box
Do you think that the IVR—which sits at the front end of the contact centers that administer your SNAP, WIC, or TANF programs—is an important part of your fraud detection and prevention arsenal? You should.
Clearly the criminals are thinking out of the box, using the IVR as a tool in their trafficking efforts. It is time for all State EBT programs to start using the IVR as a line of defense. The good news is that with behavioral analysis, the IVR can detect trafficking. And to date, the accuracy of identified, compromised accounts has resulted in near zero false positives. This is unheard of in the fraud detection industry.
At Contact Solutions we use over 60 parameters in the IVR and telecommunications infrastructure to assess the threat level of every call, including behavioral analysis of interactions with the IVRcompared to legitimate cardholders. The IVR has automated customer service for 98% of EBT callers, and has become an essential part of efficiently delivering government, financial, and healthcare customer care. There is now clear evidence that the IVR is a critically important part of the defense from fraudsters for these programs as well.
In proprietary analysis of fraudulent interactions covered in our recent press release, we have found that 1 in 360 calls into the contact center are from fraudsters, and they are using a wide variety of techniques to go undetected, including use of VOIP services, using burner phones, and spoofing numbers to mask the origins of the call, or to appear as legitimate numbers. EBT fraudsters have their own unique set of call traits.
So it is definitely time to follow Frank’s advice: Follow the money, and think out of the box. Oh, and after hearing Frank talk about the threats – buy a micro-cut shredder, and hire a top-notch credit monitoring agency that can notify you in real time if your identity is stolen!